Model 1B OBC Checklist and OBC Financial Modelling Assumptions
Authorities who are preparing an Outline Business Case will have received approval for their initial expression of interest from HCA/CLG. The expression of interest will therefore be the best starting point for producing the OBC. The OBC will however need much more information on the detail of the proposed project to meet the requirements of CLG, HCA, PRG and to allow the project to be developed into a commercial proposition.
Set out below is a checklist with an indication of the key areas which will have been picked up in the expression of interest and an indication of where further work will need to be developed in the OBC.
[For additional detailed Guidance see CLG Guide to preparing the OBC or the 4ps Guide on their respective web sites]
OBC Chapter | Expression of Interest | Additional Outline Business Case Requirements |
I Background to the project | - Summary of housing key facts and figures - Indication of housing and investment need | - Clear linkage from Local Authority priorities through strategic planning and business planning process to project objectives |
II Housing and business need | - Summary of Housing Option appraisal conclusion supported by key facts and figures to confirm "strategic fit" - Summarise attributes and condition of housing stock - Indication of housing need and continuing demand for stock in contract | - Summary of Housing Option appraisal conclusion supported by key facts and figures to confirm "strategic fit" - Describe stock numbers, attributes and evidence for condition of housing stock in relation to output specification/ availability standard - Evidence of current and continuing demand - Confirm scope of contract - Draft Output Specification/ Availability Standard |
III Option appraisal | - Summarise inputs and conclusions of ODPM Cost Comparison model regarding Value for Money and initial credit requirement assessment | - Confirm basis of Public Sector Comparator (PSC) - Consideration of scope of project in terms of dwellings/ land / services to be included - Identification of shortlist of options assessed against criteria - Indicative costing of shortlist to produce combined qualitative and financial options appraisal |
IV Financial appraisal of options/ Public Sector Comparator and Value for Money | - Summarise inputs and conclusions of ODPM Cost Comparison model regarding Value for Money and initial credit requirement assessment | - Confirmation of likely project costs and assumptions - Detail inputs and conclusions of ODPM Cost Comparator model - Detailed risk analysis to inform the value for money analysis - Private sector funding assumptions |
V Affordability | - PFI credit requirement calculated through ODPM Cost Comparison model and other analysis undertaken by the authority - Indication of Council resources available to fund project - High-level indication that project is affordable | - Detailed assessment of affordability taking account of available resources - Sensitivity analysis - Confirmation of the authority commitment to ensuring project affordability - Description/ confirmation of any additional resources contributed by the Council |
VI Output specification | - Scope of contract - Initial description of output specification (inc. availability standard) - Commitment to developing an output based specification which meets project need and user requirements - Using as a starting point 4Ps output specification guidance | - High-level draft output specification/availability sufficiently detailed and finalised to form a basis for the completion of the option appraisals, PSC, Value for Money and affordability and undertake initial market testing |
VII Deliverability | - Evidence of market interest | - Evidence of market testing - Conclusions drawn from private sector response and impact on project |
VIII Key terms and conditions and payment mechanism | - Commitment to following OGC project agreement guidance applicable to Local Authority projects as applied to PFI - Use of 4Ps guidance on developing payment mechanism | - High-level payment mechanism criteria with links to continuous improvement - Acceptance of standard project agreement terms. Confirmation of deviation to be with reference to demonstrating value for money |
IX Risk allocation and accounting treatment | - Commitment to developing a project which optimises the allocation of risk between public sector and private sector - Commitment to developing a project which meets the requirements for a favourable FRS 5 opinion and working with auditors to ensure that the assessment is revisited at key project milestones through the procurement process | - Initial risk matrix - Recognition of importance of accounting treatment and authority approach to managing accounting issues - Initial view of External Auditors on accounting treatment |
X Managing the procurement process | - Indication of the commitment and availability of senior offices and a project manager to develop and steer the project - Indication of the resources and skills/ knowledge required to develop the project - Team assembly process including procurement of external advisers where applicable | - Proposed project management structure - Deliverable project plan/ timetable - Key milestones and approval process - Confirmation of resourcing and use of external advisers - Confirmation of mechanism by which tenants and lessees informed about and involved in procurement |
XI Post-procurement contract management | - Initial consideration of process particularly for tenant / lessees involvement - Initial consideration of involvement of ALMO | - Conclusions of discussion with tenants/ lessees regarding future involvement - Conclusions of involvement of ALMO |
XII Commitment of project sponsors and stakeholders | - Evidence of the commitment of the Council, Officers and key stakeholders, especially tenants and lessees - Recognition of the financial liabilities of the project | - Signed letters confirming project support - Confirmation of tenant/ lessees involvement and support |
XIII Statutory processes | - Indication of the Planning Authority, as necessary to allow the project to succeed | - Planned approach to handling issues such as Planning Approvals |